Market Overview
According to the Ministry of Finance of the Republic of Uzbekistan, in 2018, three new insurance companies lunched their activities in the country. As a result, the number of insurance companies in the market of Uzbekistan reached up to 30 units: 24 of them operate in general insurance and 6 in life insurance industries. Two of the three new companies that entered the market operates in the life insurance industry (“Euroasia Life” and “Kafolat Hayot”), and one company (“Apex Insurance”) is in the general insurance industry. 

For the year ended 2018, the insurance market of Uzbekistan shows a high growth rate relative to the corresponding figures of the previous year. For 2018, the volume of insurance premiums in the market increased by 76% and reached 1.6 trillion UZS ($193 million USD). Taking into account the inflation rate for 2018, the real growth rate of premiums is estimated at 62%. This figure significantly exceeds the growth rate of the country's GDP for 2018, which, according to preliminary data, was 5.1%, which clearly indicates the dynamics of the insurance industry as a whole. The main drivers of market growth is life insurance.

For 2018, the volume of premiums for voluntary types of insurance reached 1.4 trillion UZS ($165 million USD) and exceeded the previous year by 98%. At the same time, premiums for compulsory insurance also showed a positive trend, but the growth rate was only 13%. The volume of premiums collected on compulsory insurance reached 263.5 billion UZS ($31 million USD). The growth rate of the premiums for voluntary insurance reflects the continued upward trend in the share of voluntary insurance in the market as a whole. In 2017 the share of voluntary insurance rose to 74.8%, then by the end of 2018, this figure increased by 9 points and reached 83.9%. This growth trend in the share of voluntary insurance in the market is estimated as a positive result, indicating a real growth in the country's insurance market.

It should be also noted that in 2018, there is also a rapid increase in insurance payments. During the reporting period, payments made by the companies increased by 71% and reached 460 billion UZS ($54 million USD). Also the main factor leading to the growth of payments in 2018 is the growth of payments on life insurance contracts.
As part of insurance payments, there is also a tendency of growth in the share of voluntary insurance. During 2018, the volume of payments on voluntary types of insurance increased by 92%, reaching 389 billion UZS ($46 million USD). For compulsory insurance, the volume of payments grew by only 6% and amounted to 71 billion UZS ($8.4 million USD). As a result, the share of voluntary insurance in total payments increased by 9.5 percentage points and reached 84%. The share of payments attributable to compulsory insurance, respectively, amounted to 16%.

In 2018, the Incurred Claim Ratio (ICR) for the market stabilized at 28%. While, in 2017, this figure rose from 18.8% to 29% YOY.
In the recent years, the life insurance industry has shown a rapid increase in premiums. As a result, for the year ended, the share of companies in the life insurance industry in total premiums reached 25%. In insurance payments, the share of life insurance exceeds more than half of total payments and is 57%. The prevalence of the life insurance industry in total payments is related to the specifics of cumulative types of life insurance, which provide for the return of the accumulated amount in the event of the expiration of the insurance contract.

Life insurance 
Over the past two years, there has been an increase in the number of companies operating in the life insurance industry. Companies in this industry manage to rapidly increase the volume of insurance operations mainly in cumulative types of life insurance. The main incentive for this growth is the favorable tax conditions created by the government of the country for individuals using long-term life insurance services. It should be noted that in 2018 the tax rate on personal income was reduced to 12%, while before it was progressive tax rate up to 23% which may affect the trends and dynamics of insurance premiums in the life insurance industry in subsequent years.

As noted above, the number of players in the life insurance industry has increased to six companies. The total premiums for companies operating in the life insurance industry increased by 3 times and amounted to 417 billion UZS ($49 million USD).

Insurance payments for the industry showed a higher growth rate, which amounted to 337%. The total volume of payments amounted to 264 billion UZS ($31 million USD).

In 2018 the premiums and payments for the industry accounted for 4 insurance companies, since the other two companies began their operations almost in the second half of the reporting period. The leader in terms of premiums in the industry was New Life Insurance LLC, which collected premiums in the amount of 159.9 billion UZS ($18.8 million USD). The second and third positions are occupied by Agros Hayot LLC and O’zbekinvest Hayot LLC with premiums of 129.6 billion UZS ($15 million USD) and 101 billion UZS ($11.9 million USD), respectively. It can be seen that the main part of the industry awards falls on the top three companies. 

The volume of insurance payments of life insurance companies increased 3.4 times and amounted to 264.0 billion UZS in 2018. The ICR of insurance premiums in the industry was 63%. A significant part of payments in the amount of 93% is accounted for the companies New Life Insurance LLC (37%), Agros Hayot LLC (30%) and O'zbekinvest Hayot LLC (25.8%).

 

General (Non-life) insurance
In 2018, general insurance industry has also a high rate of growth in premiums. Types of general insurance include property insurance, liability, business and financial risks, as well as some risky types of personal insurance. The main distinctive feature of types of general insurance is that they belong to risk types of insurance and do not contain elements of accumulation and investment income.

As noted above, in 2018 new company entered the industry. The total premiums in the industry grew by 54% and amounted to 1.2 trillion UZS ( $142 million USD). The growth rate is a significant achievement for the general insurance industry.

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The volume of insurance payments for the industry increased by only 2.7% and amounted to 196.8 billion UZS (23 million USD). Such a low growth rate of payments compared to the growth rate of premiums in the general insurance industry indicates a good underwriting result for industry companies in 2018.

In general, in terms of premiums, market leaders with a significant margin are Uzagrosugurta JSC (14.6%), Uzbekinvest NEIC (13.9%) and Gross Insurance LLC (12.6%). The next two companies getting 4- and 5-positions in the industry are Insurance Company Kafolat JSC (9.6%) and Alfa Invest LLC (6.8%). Shares of other companies in the industry are below 6%.

The concentration of the leading three companies in the industry decreased by 5.7 percentage points and amounted to 38%. The first five companies account for 57.5% of premiums, which is 2.4 percentage points lower than the previous year. The concentration of the TOP 10 company industry also decreased by 1.9 percentage points and amounted to 80.9%. It is noted that the decrease in the concentration level is a positive result of the presence of conditions for free competition in the market.
Insurance payments for most companies in the industry have seen an increase in payments. At the same time, for some companies, the amount of payments decreased compared to 2017. It should be noted that the low growth rate of aggregate payments in the industry was due to a significant reduction in the volume of payments to the company Uzagrosugurta, amid the growth in payments to the majority of other companies. Payments on this company decreased by 29.6% and amounted to 65.6 billion UZS ($7.6 million USD). As a result, the share of Uzagrosugurta JSC in total payments for the industry decreased to 33%.

The reduction in the growth rate of insurance payments in the industry over the period under review led to a decrease in the rate of ICR. Thus, according to the results of 2018, the level of ICR was 16.2%, which is 8.1 points lower than the previous year.
In terms of companies in 2018, the highest levels of ICR are observed in such companies as Uzagrosugurta JSC (36.9%), Kafolat Insurance Company JSC (26%), DD-General Insurance (20%), Uzbekinvest (18%).

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Investment activities of insurers
At the end of 2018, the growth rate of the investment portfolio of insurance companies in the market declined relative to the previous year. According to the Ministry of Finance of the Republic of Uzbekistan, for the period under review, the current volume of the investment portfolio of companies increased by 35% and reached 1995 billion UZS ($236 million USD).
 

The growth of company investments is associated with the growth of companies own funds, as well as an increase in the volume of revenues and, accordingly, the size of insurance reserves. The insurance companies carry out their investment activities in accordance with the Regulation on insurance reserves of insurers (reg. No. 1882 of December 15, 2008). In this regard, an analysis of the dynamics of the composition of companies' investments shows that companies still prefer deposits and traded securities.

A significant part of investment growth for 2018 is on deposits. The volume of investments of companies in deposits increased by 54% and amounted to 1034 billion UZS ($122 million USD). Investments in securities reached 706 billion UZS ( $83.5million USD), which exceeds the figure at the end of 2017 by 10%. As a result, the share of deposits in total investments amounted to 52%, having increased by 6.7 points and the share of securities decreased by 8 points and amounted to 35%.

In addition, investments in real estate, debt instruments, shares of private companies has also increased relative to the figure at the end of 2017. Investments in shares of private companies increased 2 times and amounted to 125 billion UZS ($14.7 million USD). Loans rose by 44%, reaching 13.9 billion UZS ($1.5 million USD). Investments of companies in real estate amounted to 115 billion UZS ($13.6 million USD), which exceeds the previous year's figure by 18%. 

In general, it is noted that in 2018 a significant increase in the share of deposits in the investment portfolio of companies and a reduction in investments in securities are observed. These changes did not have a significant impact on the quality indicators of the investment portfolio of companies.

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Recent changes in the industry
On August 2, President Shavkat Mirziyoyev signed a resolution “On measures to reform and ensure the accelerated development of the Insurance market of the Republic of Uzbekistan”. Key points of the document: 

 

• Establishment of Agency for the Development of the Insurance Market

Some of the main tasks of the Agency are ensuring openness and transparency of the functioning of the insurance market, protection of the rights of consumers of insurance services and other participants in insurance relations, helping to increase public confidence in the insurance market and the development of an insurance culture in society, monitoring compliance by professional participants in the insurance market with legislation in the field of insurance, assistance in the development of traditionally demanded insurance services aimed at meeting the growing needs of the population and business entities.

 

• Increase in the amount of minimum authorized capital of insurance companies

They will increase during 2020 - 2022, depending on the types of insurance activities.
For example, for companies engaged in voluntary insurance, from July 1, 2020, the minimum size will be 15 billion UZS, and from July 1, 2020 – 20 billion UZS.

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• Electronic policies

These will be e-policies for certain types of insurance. You can issue them through mobile applications, sites, information kiosks. Electronic policies equate to contracts on paper. They are expected to appear before January 1, 2020.
Tax reduction from January 1, 2020
The single tax payment rate for legal entities - insurance brokers and insurance agents is determined at 13% of commission fees.

 

• Other reforms in the industry

An increase of up to 50 percent of the authorized capital of the insurance organization of the maximum size of the reserve fund of the insurance organization, formed by deductions in the amount of up to 20 percent of income with reference to deductible expenses.

Pilot introduction of mechanisms for payment of medical services for the “treated case” in Syrdarya region and the methodology of the financing system based on the “per capita standard” - starting in 2020, as well as the system of compulsory medical insurance - since 2021.

Also, Road Map on accelerated development of the insurance market of the Republic of Uzbekistan for 2019-2020 includes introduction of new types of insurance (comprehensive banking insurance, flight delay and cancellation insurance, investment life insurance, accumulative insurance for higher education of a child)